Australia shoots down carbon tax scheme

Thursday, July 17 was a big news day. The world was shocked to learn that a Russian-made missile shot down a Malaysian Airlines jet with 298 on board as it flew over Ukraine en route to Kuala Lumpur from Amsterdam. Though flight 17 eclipsed the news cycle, there was another thing shot down on July 17.

Almost a year ago, Australia’s Prime Minister Tony Abbott won a landslide election with a nearly single-issue campaign: repeal the carbon tax. On July 17, he made good on that promise, as the Australian Senate voted, 39 to 32, to abolish the “world’s biggest carbon tax”—a tax that was reported to “do nothing to address global warming, apart from imposing high costs on the local economy.”

Australia was one of the first major countries, outside of the European Union, to adopt a carbon price—first suggested in 2007 and passed under Labour Prime Minister Julia Gillard in 2011. Gillard’s campaign promise was: “There will be no carbon tax under the government I lead.” While she attempted to brand it a carbon price, not a “tax,” Sinclair Davidson, a professor in the school of Economics, Finance and Marketing at RMIT University, said: “the electorate had a very specific understanding of her words” and perceived it as a broken promise.

Australia’s carbon tax, according to the Wall Street Journal (WSJ), was “recognized by the International Energy Agency as model legislation for developed countries.” WSJ reports that when Australia’s carbon tax was passed, the Brookings Institute “described Australia as an ‘Important laboratory and learning opportunity.’”

So, what do we learn from the “laboratory” the now-failed “model legislation” offered?

First, WSJ states: “The public hates it.” The (UK) Telegraph calls the tax: “one of the most unsuccessful in history” and points out that it is “unique in that it generated virtually no revenue for the Australian Treasury due to its negative impact on productivity; contributed to the rising costs that have taken the gloss off the country’s resources boom; and essentially helped to bring down Ms Gillard’s former Government.” The Telegraph, in an article titled: “Australia abandons disastrous green tax on emissions,” adds that the tax failed in “winning over voters who faced higher costs passed on by the companies that had to pay for it.” In Slate, Ariel Bogel claims the 2011 bill required “about 350 companies to pay a penalty for their greenhouse gas emissions.”

While Australia is, as WSJ put it: “the world’s first developed nation to repeal carbon laws that put a price on greenhouse-gas emissions,” it is not the only one to back away from such policies. New Zealand has weakened its emissions trading scheme; Japan has retreated from its pledges to cut greenhouse emissions and instead committed to a rise in emissions; Canada withdrew from the Kyoto protocol in 2011; England, where “the bill for green policies is rising,” has “so far resisted calls to expand tax on carbon emissions”; the European Union carbon emissions trading scheme­—the biggest in the world and the heart of Europe’s climate-change program—is in dire straits; and, just the day after Australia’s news was announced, South Korea—whose planned 2015 emissions trading market launch would make it the world’s second largest—hinted at an additional delay due to projected costs to businesses.

The Telegraph offers this summary: “carbon trading mechanisms and green taxes have largely been a failure elsewhere and especially so in Europe where they have dragged on investment and threatened long-term energy security.”

These are important lessons in light of the renewed push for a carbon tax in the U.S. as evidenced by the partnership of President George W. Bush’s Treasury Secretary Hank Paulson, Former New York Mayor Michael Bloomberg, and liberal billionaire Tom Steyer, who are, together, calling for a climate tax.

According to the WSJ, the World Bank called Australia’s repeal, “one of the biggest international threats to the rollout of similar programs elsewhere.” The climate lobby is concerned as “Australia’s vote shows that the real obstacle to their dreams of controlling more of the world’s economy is democratic consent.”

In the U.S., similar efforts to reduce CO2 emissions by increasing costs to emitters, and therefore consumers—in our case, cap and trade—failed to achieve “democratic consent” even when Democrats had control. The people didn’t want it. So, the Obama administration now is trying to go around Congress with onerous rules and regulations on emissions.

As in the U.S., a carbon tax—or cap and trade—is not the only policy increasing energy costs to Australian consumers. In the U.S., we have the Renewable Portfolio Standard; in Australia the Renewable Energy Target (RET). Both require the addition of expensive wind-and-solar energy.

Jennifer Marohasy, PhD, who worked for twelve years as a scientist for the Queensland government, told me: “Of course while the carbon tax needed to be repealed, its abolition will go only some way to reducing pressures on Australian businesses and households. The so-called Clean Energy Act 2011 is part of a tsunami of regulation and legislation introduced over recent years that has seen the average electricity price in Australia increase by 70 percent in real terms. Next in line must be the mandatory RET, a government-legislated requirement on electricity retailers to source a specific proportion of total electricity sales from renewable energy sources including wind and solar, with the extraordinary costs serving as a hidden tax—paid by all electricity users.”

In the Australian Financial Review, Alan Moran, an economist specializing in regulatory matters, in particular covering energy, global warming, housing, transport, and competition issues, and Director of the Institute of Public Affair’s Deregulation Unit, agrees that the carbon tax is just one of the burdens holding down the Australian economy. He sees a cascade of programs for support of high-cost renewables and penalties for fossil-fuel use and “a bewildering array of subsidies and programs.”

Both see the RET as the bigger issue. Marohasy says: “In short, repeal of the carbon tax is a big symbolic win. But it’s mostly just window-dressing: to appease the masses. In the background, proponents of anthropogenic global warming who dominate our political class still very much control the levers of government and intend to continue to terrorize the population with claims of catastrophic global warming, while consolidating their rent-seeking through the RET.” She explained: “Money collected from the carbon tax went to government, money collected through the RET largely goes to the global warming industry.” Which is why some in the Australian Senate agreed to vote for the repeal—as long as the RET isn’t touched.

However, Abbott has stated: “All of us should want to see lower prices and plainly at the moment the renewable energy target is a very significant impact on higher power prices.” Time will tell how Abbott fares in the RET battle. But for now, he’s given the world a “learning opportunity” on climate change and energy policy.

Meanwhile, the climate lobby resorts to hyperbole to push its scare-mongering tactics. In closing her piece in Slate, Bogle whines: “As someone who has to live in the quickly cooking world Abbott leaves behind…” Perhaps she’s missed the data that the planet’s predicted warming hasn’t happened—despite ever-increasing CO2 emissions. According to satellite records, there has been no warming in almost 18 years.

May America learn from, as the Brookings Institute observed, the “important laboratory” of Australia’s foray into climate schemes.

The author of Energy Freedom, Marita Noon serves as the executive director for Energy Makes America Great Inc. and the companion educational organization, the Citizens’ Alliance for Responsible Energy (CARE). Together they work to educate the public and influence policy makers regarding energy, its role in freedom, and the American way of life. Combining energy, news, politics, and, the environment through public events, speaking engagements, and media, the organizations’ combined efforts serve as America’s voice for energy.